NEW DELHI: There's festive cheer for about two lakh employees of the public sector insurance companies with the finance ministry approving a 17-18 % salary increase.

"We have approved the wage revision," said a finance ministry official and added that it is similar to the one approved recently for public sector banks.

The wage revision comes close on the heels of the central government employees getting a 10% rise in dearness allowance , and is sure to give some boost to the already robust consumer durable sales.

The wage increase would be effective from August, 2007, which means that employees would also be receiving substantial arrears just ahead of the festival season . Employee unions have given a thumbs up to the revision agreement notified on October 13.

"I think it is a fair amount as we've expected," said A K Singhal, chairman, General Insurance Public Sector Association. But, the wage revision is not likely to substantially impact the bottom lines of insurance companies as they had been provisioning for the increase from 2007.

"We have already provided for it," said M Ramadoss, chairman and managing director, New India Assurance. The new wage scheme worked out between the unions and the government also provides for a revision in the dearness allowance every time there is a four point rise in the quarterly average of the all India consumer price index.

There has also been a substantial increase in the allowances including house rent allowance in all categories. "The wage revision is in sync with what was given to the employees of Life Insurance Corporation and public sector banks, Mr Singhal said.

Similar views were echoed by R K Kaul, CMD Oriental Insurance who said that the wage revision would further motivate employees. However, some unions are not celebrating yet and will wait they see the notification in black and white. "We need one more pension scheme as it exist in banks.

We are awaiting for the administrative information on the pay revision and will then chart out a plan," said CA Baskaran , President, United India Insurance Officers Association.